Monday, 8 February 2010

Carbon Emissions Management – IT solution vs management consultants

Ernst & Young has published a report entitled ‘Carbon Market Readiness’ looking at the implications for accounting, compliance, reporting and tax considerations of US state and national carbon
emissions programs.  The report is here – it’s US-focussed but applicable pretty much world wide.

One point to note is that whilst there is no national legislation in the US, the report shows the extent of local (although often voluntary) programs that include some emissions counting and reporting requirement, as the map below shows. 

 

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Anyway, the report concludes that US lawmakers are focused on carbon emissions management - new mandatory GHG reporting requirements from the EPA took effect on 1 January 2010 and further legislation is expected.  “To stay ahead of the curve, companies need to make sure they have fully embedded carbon considerations in their business strategy to ensure that climate change issues are properly addressed. This includes their risk management operations, day-to-day business, accounting and tax planning.”  It goes further: “It is also important to incorporate public perception of GHG emissions into the overall business plan and properly report emissions from a tax and financial disclosure perspective”.

The report points out that these changes should be looked at not just as a cost but also a potential opportunity.  Carbon reduction projects can generate a positive return on investment and new product or service lines can create new sources of revenue, for instance in capturing, storing, and selling of emissions themselves and/or trading emissions credits.

Ernst & Young is clearly keen to work with its clients in taking the appropriate action, but in terms of ‘straightforward’ carbon accounting much, probably most, will be done through online solutions.  Carbon Emissions Management Software (CEMS) can be very sophisticated and by keeping the ability in-house provides significant flexibility, as well as, in most cases, a lower cost.  Nevertheless, legislation, accounting and other issues, will become increasingly complex, particularly for international companies – fertile ground for management and tax consultants.

© The Green IT Review

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